5 Most Common Franchise Problems and How to Solve Them

At first appearance, owning and maintaining a restaurant franchise appears to be an excellent financial move. The restaurant’s brand is well-known, and much of the marketing is handled by a specialized crew at the corporate office. As a franchisee, you may believe that all you have to do is keep shop sales up and you’ll be raking in riches in no time.

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Unfortunately, that is not the end of the tale, and there are a few franchise-specific challenges to success that operators must overcome.

Common franchise problems and possible solutions:

1. Higher-Than-Expected Operating Costs

Aspiring franchisees must be willing to invest a significant amount of money to get the business off the ground. Between license fees and startup expenditures, the total may quickly reach the six- or even seven-figure level.

Some franchisors even want prospective franchisees to have hundreds of large amounts of cash on hand, which adds to the expense. In addition to these one-time startup expenditures, franchisees must pay ongoing fees depending on sales and running expenses.

Possible solution: While you cannot avoid royalties and fees, you can try to cut costs on your opening expenses. Look for local contractors and renovators who can provide you with the greatest pricing. You might also consider purchasing an existing franchise rather than starting your own, which reduces renovation and remodeling expenditures significantly.

2. Less Brand Control and Consistency

Franchise control issues are rather common. The brand concept must be consistent throughout all franchise sites, regardless of the number of locations. Brand standards guarantee that your franchise is regarded as part of a larger, consistent brand rather than as a standalone entity. This implies that a mistake made by one person at one restaurant, no matter how big or tiny, can affect the perception and performance of hundreds or even thousands of other locations.

Possible solution: The best step in preventing this problem is to hold oneself to the best service standards possible. That way, if an issue happens in a separate location with which you are not directly associated, your loyal customers will be able to see past it.

3. Less Decision Making Power

Independent restaurateurs get to determine their restaurant’s concept, change the menu anytime they want to try something new, and work hard to carve out a very distinct place in their neighborhood. This is not the case with franchisees.

Possible solution: This is another typical franchise issue that doesn’t always have an obvious answer other than changing your personal attitude.

Being ordered to introduce a new menu item or honor a limited-time offer may not be what you want, but keep in mind that your franchisor wants to make money just as much as you do. If a company-wide change is being implemented, it has most likely been researched, planned out, piloted, and determined to boost sales and/or profit after months of labor to establish and execute a final version.

4. Inadequate Support Structure

Many franchisors fail to completely implement a suitable and growth-ready infrastructure for support systems, processes, and procedures, despite the fact that new franchisees demand a large level of help.

This might range from basic problems like not having enough website capacity to serve increased traffic or technical assistance for franchisees to failing to have sufficient training and quality control processes in place.

Possible solution: Always make your initial research in choosing the right franchise for you. Franchisors should constantly ensure that their firm can expand at a higher volume. This is critical to establish while developing the initial franchise model and developing the structure and processes for the first franchise.

5. Hiring the Best Team

One of the most crucial components of beginning and operating a business is your team. Always recruit people that share your basic beliefs and can contribute a unique skill set. They should embody your brand and believe in long-term business success.

Working in a franchise restaurant may appear appealing due to brand awareness, but it may also draw less qualified people due to perceived convenience

Possible solution: Better hiring and retention practices are two ways to reduce turnover at your franchise. Make sure you invest time in identifying individuals and asking the correct restaurant interview questions.

Bottom line:

While franchisees benefit from immediate brand awareness upon launching, there are a few common franchise issues to consider before making the initial investment.

Sally Mae

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